How I used Monzo to help me out of debt...
I promised some more content about how I managed to budget and save my way out of debt - and one of my biggest tips is open a Monzo account. Now.
Monzo massively shifted how I think about money, and more importantly how I spend it. From round ups to tracking my spending, I'm going to show you how I used it to help me change my relationship with money and get myself debt free.
1) Instant spending notifications
This was the most important shift in spending for me. With Monzo and the app to compliment, every time you spend you receive a notification on your phone to say what you have spent, and how much you have spent in the day. At the time I was working in an office and the amount I realised I was spending on the walk to and from work and in lunch hours shocked me.
Adding it all up and working out the amount I was spending every day was so much different to what I thought of as just spending a few pounds here and there.
2) Categorise spending.
Monzo categorises your spending in the most simple format. You can see exactly where you have spent your money in a given time period - which makes things so much easier to track. When I started my debt free journey I used these categories to work out exactly where I was wasting money - mostly on snacks and takeaways!
Categories are chosen automatically based on who you are paying, but you can change them yourself by clicking on the payment and tapping the category icon to change it.
3) Set an overall budget
You can set a budget on Monzo to help you stick to it, which you can also categorise! For example if this month you wanted to budget yourself to £100 on groceries - you will be able to see how much of your budget you have left throughout the month.
As you spend you will be notified if you're getting close to your spending limit for each category. You can still spend over these limits, but obviously the aim is to stick with them!
4) Set your pay date
By setting the date you get paid, all of the above budgets will reset on your pay date. This will then show you how much money you have left to spend, and whether Monzo thinks you have enough to last for the month. Your aim is to keep the circle green throughout the month - mine was red for a good few months until I worked out where my spending was out of control and how to tame it!
5) Savings pots
Savings pots were the biggest ways I managed to start saving money, and when I first started with Monzo I would manually move everything over. I had a dedicated savings pot which I would transfer money into when I was paid. The normal Monzo pots won't allow you to earn any interest but you can move money back whenever you need in just a few clicks, which I felt much more comfortable with when I was struggling to budget.
6) IFTTT integrations
Combining IFTTT integrations and Monzo was the real start of my savings journey. I'd recommend this later on when you have got a real grasp on your spending using the five tips above - because these can be a bit mind blowing at first!
Once I had got a grip of my spending and I could see savings starting to grow, I set up IFTTT integrations. There are so many different savings options through this app, but essentially it is a tool that can be used to automatically save your money into Monzo pots when you spend in certain places, or daily savings challenges that run throughout the year.
The integrations I have set up are:
- The 1p savings challenge: Gradually increasing the amount you're saving each day. On 1st Jan you'll save 1p, 2nd Jan 2p... going up to £3.65 (or £3.66) on the last day of the year.
- The reverse 1p challenge: Gradually decreasing the amount you're saving each day/ On 1st Jan you'll save £3.65, 2nd Jan £3.64... going down to 1p on the last day of the year.
- The £1 weekly savings challenge: Running every Monday, save £1 in week 1, £2 in week 2... right up to £52 in the last week of the year.
- Save the date: Taking today's date, adding up the numbers and saving the total in a pot. For example 21st January 2022 would be 21 + 1 + 22 = 44p.
- Every time you spend, save £1.
- Round ups: Round every purchase up to the nearest £1 and save the change. if you spend £4.98 it will save 2p.
There are so many more of these integrations which are all really easy to set up through the IFTTT app, I love them because although they add up to saving the same amount as my savings 'goal' for the month - it feels much easier than transferring a lump sum as the payments are gradual and automatic.
I hope these help, and let me know if you have any other tips and tricks or anything specific you would like me to talk about on here.
I have also set up a private and hidden Facebook group for women struggling with finances and debt, as a safe space to support each other and give out tips and tricks. If you would like to be invited to the group please let me know!
The Fruit Moth
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